Use the Information for the Question(s)below

question 49

Multiple Choice

Use the information for the question(s) below.
You own your own firm and you need to raise $50 million to fund an expansion.Following the expansion,your firm will be worth $75 million in its unlevered form.You want to go ahead with the expansion,but you are concerned that you may not be able to maintain ownership of over 50% of your firm's equity.In other words,you are concerned that if you use equity to finance the expansion,you may lose control of your firm.
-Assume that capital markets are perfect,you issue $30 million in new debt,and you issue $20 million in new equity.You ownership stake in the firm following these new issues of debt and equity is closest to:

• A)58%
• B)50%
• C)33%
• D)55%

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Definitions:

Employee Turnover

The rate at which employees leave a company and are replaced by new employees, which can impact organizational performance and morale.

Direct Sourcing

A recruitment strategy where companies use their own resources and efforts to find candidates for job positions, bypassing external recruiting services.

Referrals

The process of recommending someone for a job based on personal or professional contacts, often used to find potential candidates.

Company Web Site

An online platform owned and operated by a company to provide information about its business, products, and services to the public.